I’m an author, journalist and one of the UK’s social media pioneers. Here I write about publishing, self-publishing and crowdfunding.
I am also the author of Argleton, a novelette about a mysterious town that appears on digital maps but doesn’t exist in reality. I self-published via Kickstarter and Amazon Kindle, and am negotiating my way through the publishing world and exploring new business models for entrepreneurial authors along the way.
As a freelance journalist, I have written about social media and technology for FirstPost.com, The Guardian, CIO Magazine and Computer Weekly.

For the first time, the “Big Six” publishers — HarperCollins, Random House, Hachette, Simon & Schuster, Penguin and Macmillan — have refused to sign Amazon’s latest annual contract. The main sticking point is exorbitant increases in “co-op promotional fees” for e-books that the publishers see as an illegal gouge by another name. One person familiar with the details of the proposed 2012 contracts that Amazon has submitted to major New York publishers described them as “stupifyingly draconian.” In some cases, he said, Amazon has raised promotional fees by 30 times their 2011 cost.

PaidContent’s Laura Hazard Owen then reported that at least two of the Big Six are definitely refusing to sign. She said that although a failure to sign “could end with their ‘buy’ buttons being turned off, it is more likely for now that the feud will result in less promotion of their titles on Amazon’s website.”

Amazon is still selling these publishers’ books, Owen said, but isn’t promoting them on its site the way it used to. One sticking point is the money that publishers have to pay Amazon to get their books promoted on the website. The concept of these ‘co-op fees’ comes from bricks-and-mortar shops which would charge publishers for the best placement in the shop. Amazon, unsurprisingly, decided to keep that model for its website. But now Amazon wants bigger discounts from publishers and higher co-op fees and the Big Six aren’t happy about it.

“They decided they wanted me to change my terms,” said Mark Suchomel, president of the Chicago-based I.P.G. “It wasn’t reasonable. There’s only so far we can go.”

With each side unwilling to yield, Amazon pulled the plug, and all of I.P.G.’s books for Kindle disappeared. The physical books were not affected. A spokeswoman for Amazon declined to comment.

Of course, the Big Six aren’t about to start making any decisions on Amazon’s contract in a way that might look as if they’ve been talking about it. Apple and five of the six are already under investigation by the US Justice Department for alleged collusion over ebook pricing. The publishers and Apple agreed to use what’s called the agency model, where publishers set the price of ebooks and Apple takes a 30 percent cut, rather than a wholesale model where the publishers sell titles at a discount and the bookstore adds their margin on top deciding the final price without input from the publishers. The agency model isn’t illegal; the accusation is one of ebook price-fixing, which Apple and the publishers deny.

Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90% to roughly 60%. Customers are benefiting from the surprisingly innovative e-readers Barnes & Noble’s investments have delivered, including a tablet device that beat Amazon to the market by fully twelve months. Brick-and-mortar bookstores are starting to compete through their partnership with Google, so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition.

If a couple of the major publishers refused to renew and pulled their ebooks from Amazon, it’s seems likely that Amazon would lose even more market share. Amazon has been the 800lb gorilla in the book market for far too long, but with its share decreasing, the withdrawal of a couple publishers’ catalogues might help to even the market out. Amazon, then, will have to decide whether it wants to take the publishers’ terms or carry on without them.

I don’t think it would be a bad thing for Amazon to no longer be the canonical source of books. We don’t expect DIY stores or clothing stores to carry every single power tool or shirt available, so why do we expect online bookshops to carry every single title published? It might be more convenient for us not to have to shop around, but is it better for us, the readers, in the long term? In my opinion, no. Monopolies lead to anticompetitive behaviour, but squeezing the publishers results only in the squeezing of authors and they’re the ones who end up bleeding out.

I happen to think that ebooks are hideously overpriced at the moment, but that’s an issue I want to see resolved through dialogue between buyer and publisher, not through the imposition by Amazon of onerous terms and extortionate fees on the publishers. Because if Amazon controls the Big Six, what hope is there for any improvement in the way it treats self-publishers?

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I wish Amazon had a chokehold on publishers. I’d be paying a lot less for ebooks if they did. Amazon doesn’t have a greed problem. They try to sell things as inexpensively as possible. That is why they dominate their markets. The publishers hate Bezos because they can’t make as much money as possible, per book, with Amazon’s selling philosophy.

Cheap always comes at a cost, whether that’s jobs, working conditions or quality. And as a consumer, it’s unsurprising that you want things cheap, but it’s not you who has to pay the cost, it’s the producers, in this case, publishers/authors. And it should be down to the publishers/authors how they price their goods and what costs they are willing to bear – they shouldn’t be strong-armed into it by a distributor.

If cheap ebooks is your think there are more cheap or free ebooks already online than anyone can hope to read in a lifetime. Project Gutenberg has a whole raft of classics, and many modern writers make their ebooks available on Amazon for just pence, including me. I put mine on my own site for free, too. But the thing is, that’s my choice, not Amazon’s.

Pricing is always a dialogue between the producer who wants to earn as much as possible and the consumer who wants to pay as little as possible (most of the time, although not always). Amazon shouldn’t be wedged in the middle, forcing publishers to sell more cheaply than they want.

Amazon’s model is to sell as much stuff for as cheap as possible. It is not their stuff that they are selling. Other people make stuff they just put it out there.

The model is we have everything you want. We have good prices. Come to our portal.

The publishers and authors want to maximize their profits as does Amazon. They have a different way of going about it.

Ultimately the consumer wants everything for free. The seller wants to get as much as they can for each thing they sell. They both compromise and a price is settled on.

This is a fight about control of the product. Amazon wants to leverage its position as the largest retailer on the planet and the publishers want to leverage their position as the providers of the content. The publishers seem to be saying to Amazon that you are not the only market we can sell through.

Davel, for the first time in years, Amazon is indeed not the only market that publishers can sell through, and although it’s still big, it’s not as dominant as it once was. With 60 percent of the ebook market and falling, there’s now the opportunity for publishers to leave Amazon without risking massive financial losses because, for once, they have options. If they do leave, Amazon will be in the position of not having complete control over almost all books, thus breaking their stranglehold on pricing. If two or three big publishers pulled from Amazon, then their presence in other stores would strengthen those stores, increasing their market share in comparison to Amazon. This could be the beginning of an evening out of the ebook playing field which would, I think, ultimately benefit authors and readers alike.

Who is really being greedy? I thnk the publishers are. The digital format has really put a dent in Used Book Sales. What royalties go back to the publishers or authors from books that are resold? It’s harder for people to resell or pirate digital copies from their Kindles or Nooks. Amazon and BN have more costs to deal with in their tablet/reader products (customer service, manufacturing, software & hardware updates), with publishers saving so much more money on production costs.

There are so many expenses associated with making physical books that the digital format has eliminated. Think “remainder” marks, stripped magazine covers, postage/shipping, and the human additive of processing these wads of pulp. I think in this case, the greed is greener on the othe side of the fence!

The fact that there are multiple stores out there is a very good thing, but the overall shopping experience is stil a long way short of physical stores. They need to address both that and the unfair ebook pricing before ebooks will really become a threat to paper books, I feel.

I agree that overall, the online books/ebooks shopping experience is poor, and that ebooks are overpriced, but I don’t see the two formats as necessarily being a threat to each other. With a clever strategy, they could really become symbiotic rather than cannabalistic, but of course, whether the big publishers have the smarts to enact a clever strategy remains to be seen.

“…We don’t expect DIY stores or clothing stores to carry every single power tool or shirt available, so why do we expect online bookshops to carry every single title published?…”

I think the difference between your analogy is that books on a Kindle device cannot be easily transferred to another e-Reading device like BN’s Nook. If all of the ebooks are not available online from a single source and different sources requires different eReaders, it would mean that you will need to purchase every different kind of available eReaders on the market to ensure you can get the books you want. You can see why there will always be a tendency for people to migrate to a single online source.

As for the power tools and shirts, after I purchase them, I can freely give it or sell it to any one I choose. Perhaps in order to resolve the current Amazon, Apple and publishers ebook situation, the ebook format cannot and should not be proprietary and be used on a single eReader format.

I can read Kindle books quite happily on my iPad and iPhone, so there is some degree of inter-operability, but nowhere near enough. I would certainly like to see publishers ditch DRM and allow people to move their ebooks around. Though I compared Amazon with offline stores, it was really only in terms of size of inventory, not in terms of the way that the goods are handled after purchase. There are some clear parallels but also clear points of divergence between electronic goods and physical goods and it’s not as clear cut as to say that electronic goods should be given the same affordances as the physical world. That discussion, though, is for another post.

As I said in the article, as far as I am from agreeing with the way that publishers are dealing with ebooks and ebook pricing, they should still be free to make their mistakes the way they want to without having to toe Amazon’s line.